Pakistan is looking to buy Russian oil at $50 per barrel, media reported on Sunday, as the South Asian country is grappling with an economic and foreign reserves liquidity crisis.
Pakistan is desperate to import energy at low costs, after it was outspent on the market last year when oil and gas prices surged while Pakistani foreign exchange reserves dwindled.
A potential purchase of $50 oil from Russia would be $10 below the G7 price cap on Russian crude, below which shipments are still cleared to enjoy insurance and financing services from Western companies.
Russia will have to first arrange and complete formalities such as shipping costs, insurance, and mode of payment before replying to Pakistan’s request for heavily discounted Russian crude, according to a report in The News carried by PTI.
Pakistan hopes for “good discounts” from Russia, earlier reports have said.
Russia, for its part, was initially uncertain whether Pakistan would want to proceed with an oil deal, according to a report in The Express Tribune. Following a recent meeting between Russian and Pakistani officials, Russia has asked Pakistan to purchase and import one cargo as a test case.
According to the News, Pakistan will test the cost of landed oil cargo from Russia by importing one cargo.
Other reports said last week that the first cargo from Russia—the one to test the costs and increase the “trust” between the parties – could depart from Russia by next month.
Pakistan hasn’t been a major importer of Russian oil and gas so far.
Many large customers in Asia haven’t joined the price cap mechanism, but China and India, for example – Russia’s top crude oil buyers now – are demanding steep discounts for the Russian grades.
Meanwhile, Pakistan’s economic and energy crises have deepened in recent months as the South Asian country is trying to negotiate a new deal for a loan with the International Monetary Fund (IMF).